Strategy, Tactics And Business PlanPresentation Transcript
What’s Happening?! Quest is negotiating to buy MCI for about $6.2 billion. Bush push to overhaul social security. 76,152 students applied to the UC system this year. Tivo president resigned over vision conflict with founder and CEO.
What’s Happening! Midterm Exam I will provide the exam answer paper. Six essay questions: 1 is worth 25 points 1 of 2 is worth 20 points 1 is worth 15 points – must answer 4 are worth 10 points
Chapter 7 Summary Implementing a Vision: Strategy, Tactics and Business Plan
Important Chapter Topics
How to transition a vision into reality through strategy, tactics, and business plans.
Fundamentals and guidelines that relate to business strategies.
How strategies dictate the role and significance of information systems.
Defining the Process Elements
Vision: Identifies what the organization wants to look like at some logical point in the future.
Strategy: How a company will achieve the long-term goal of the vision.
Tactics: More specific time-oriented, measurable ways to make a vision a reality.
Business Plan: Allocation of funds and other resources.
Business Strategy Focus
Competitive Environment: The primary market and major competitors and whether current strategies are producing the intended results.
Customer Targets: Are their primary needs being satisfied?
Product portfolio: Is it on target or does it need to be changed and/or broadened?
Financial Implications: Are current and projected results up to expectations?
Resource Allocation: Do changes need to be made?
Porter Strategy Guidelines
Business Strategy Model Guidelines 1. What products and/or services do we intend to offer? 2. What price range of products do we intend to offer? 2. What customer targets do we intend to pursue? 3. What geographic markets do we intend to address? 4. How will we obtain products to sell to our customers? 5. How will we deal with sales to our customers? 6. What company structure do we intend to create? 7. What information systems approach will we take?
Internal Analysis External Analysis
Important learning points:
Market factors triggered the need for a new vision and supporting strategies.
The CEO had problems in getting his employees to accept the fact that a major change was needed.
Changes involved refocusing product and service strategies and related business processes and systems.
Information systems played a major role in support of the new strategies.
IT Based Strategies MARKET PLACE OPERATIONS SIGNIFICANT STRUCTURAL CHANGE TRADITIONAL PRODUCTS AND PROCESSES Federal Express USA Today Charles Schwab Whirlpool Xerox BancOne Boeing Frito-Lay Wal-Mart USAA L.L. Bean McKesson Figure 7-6
Possible Exam Questions
Explain the relationship between the vision of a company and the challenge of making things happen.
Explain the intent of Figure 7-3 and why it could be difficult to implement such an approach.
Chapter 8 Summary Evaluating Business Strategies and The Use of Information Systems: The Strategic Option Generator
To identify strategic opportunities involving the use of information system.
To relate the use of information system to gain a competitive advantage.
Vision Strategy Tactics Business Plan
Roles, Roles and Relationships
Redefine and/or Define
as the Delivery Vehicle
Success Factor Profile
Figure 1-4 A Systematic Approach
TARGET CUSTOMER COMPETITOR SUPPLIER THRUST DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE MODE DIRECTION OFFENSIVE DEFENSIVE USE PROVIDE EXECUTION STRATEGIC ADVANTAGE STRATEGIC OPTION GENERATOR Figure 8-1
TARGET CUSTOMER COMPETITOR SUPPLIER THRUST DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE MODE DIRECTION OFFENSIVE DEFENSIVE USE PROVIDE EXECUTION STRATEGIC ADVANTAGE Federal Express Analysis Using the Strategic Option Generator Figure 8-2
TARGET CUSTOMER COMPETITOR SUPPLIER THRUST DIFFERENTIATION COST INNOVATION GROWTH ALLIANCE MODE DIRECTION OFFENSIVE DEFENSIVE USE PROVIDE EXECUTION STRATEGIC ADVANTAGE UPS Analysis Using the Strategic Option Generator Figure 8-3
It is necessary to understand and use the Strategic Option
Some important guidelines:
Target: be sure to identify the correct primary target
Thrust: differentiation or cost must be selected, not both.
Supporting Strategies: any combination of the three can be selected.
Direction: it is confusing and the name of the element is not self-explanatory. The intent is to identify whether the users of the information systems are company employees or external to the company.
Possible Exam Questions
Explain the elements of the Strategic Option Generator.
Explain how the Strategic Option Generator should be used in Section III of the analysis term paper.
Chapter 9 Summary The Roles, Roles and Relationships Concept
Roles, roles and relationships concept.
Managing IS as a business.
Technology transfer through organizational learning.
IS as a Competitive Resource?
Business competitiveness is a top priority.
What about Information Systems?
Roles, Roles and Relationship Concept *********** 1. The role of information systems is focused on competitive priorities. 2. Senior management plays a major role in positioning and prioritizing the competitive role of information systems. 3. There is an on-going working relationship between senior management and the information systems organization to sustain the successful use of information systems to compete.
The Role of the Senior Executive
Provide a long term vision for the future of the business.
Recognize the value of information to the organization.
Sponsor and participate in determining the role of information systems.
The Person that Runs the Business on a Day-To-Day Basis
Communicate the importance of the information systems role.
Provide funding, including R&D, to address the major requirements.
Focus on results and benefits.
Motivate to make things happen!
Role of Other Senior Management
Understand the role of information systems within the organization.
Identify and specify requirement for new information systems.
Justify and fund existing and new systems.
Sponsor their information systems on an on-going basis.
Role of IS Executive
Function as a member of the senior management team.
Provide an understanding of the realm of the possible, feasible, affordable and achievable with information systems.
Posture information systems as a service and support organization in both fact and perception.
Roles, Roles and Relationships Leadership in two forms: - Business Leadership - IT Leadership
Managing IS as a Business
Important to recognize that the IS organization is
really in three different businesses:
Designing information systems.
Building information systems.
Running and maintaining information systems.
Information Technology Computer-based Applications Organization Concurrent Learning Curves
Outsourcing Hiring someone whose expertise can perform a business function or activity better, more cost effectively and/or in a more timely manner than can be achieved in-house. Also enables the company to focus on its core competencies and those factors that mean the difference between success and failure.
Possible Exam Questions 1. Explain the importance of the roles, roles and relationships concept if a company has decided that it definitely wants to use information systems to gain a competitive advantage. 2. Can a company successfully use information systems as a competitive resource by outsourcing the management of this resource to an outside company?
Chapter 10 Introduction The Redefine and/or Define Concept and Change Management
Redefine and/or Define Concept
The Product and Service Delivery Process
The Challenge of Change Management
To understand the second of the two core concepts of the structured analysis approach.
To appreciate the importance and significance of change management within an organization.
To remember that information systems is viewed as a major cause of change within a company.
Redefine and/or Define Concept
Redefine = Change
Define = Clarify
How an organization can change and clarify the role of IS to achieve and sustain competitive advantage?
Redefine and/or Define What?
Products and/or services
Value to customer
Product and Service Delivery Process
Is the delivery process of the product more important than the product itself?
Delivery Process Product/Service Value to Customer Figure 10-1 Value-Add Process What the Customer Buys Product/Service
Four Challenging Factors:
The pace and time pressures of change.
Financial controls may not allow increase in the number of employees despite growth.
Shifting of productivity and other operational objectives to IT.
Dramatic improvements in IT price, performance, and function.
Change is the norm in most businesses.
Information technology can be a catalyst or vehicle for change.
Organizational change must be carefully managed.
Employees and management must understand and accept the need for change.
Chapter 10 The Redefine and/or Define Concept and Change Management
We live in a word of change, yet we act on the basis of continuity.
The Challenge of Change Millions of ordinary, psychologically normal people will face an abrupt collision with the future. Many of them will find it increasingly painful to keep up with the incessant demand for change that characterizes our time. Alvin Tofler Futurist
Definition of Change Making an essential difference often amounting to a loss of original identity or a substitution of one thing for another.
Equipping a company with the latest technology doesn't mean a thing if you don't alter how your employees think and how management leads them. Chad Frost President Frost Inc.
As we change what computers can do, we must change what we can do with computers. Max Hopper Former CIO Information Systems AMR and American Airlines
Redefine Change Define Clarify
Companies that achieve a sustainable strategic advantage with information technology generally redefine the factors of competition rather than using technology in a traditional way.
Competitive Advantage Through Use of IS? ********* Redefine and/or Define: 1. The Business 2. Products and/or Services 3. Business Processes To Provide Value to Customer
McDonald’s as Concept Source
Defined its products.
Redefined processes to make the product.
Defined customer service as quality, product predictability, fast service, cleanliness and friendliness.
Set standards for these and trained its employees accordingly.
Redefined the “hamburger business.”
Peter Drucker’s Assessment:
Redefine and/or Define The Business
American President Companies
Redefine and/or Define Products or Services
Any company that has introduced an E-commerce approach in addition to an existing brick and mortar operation.
Redefine and/or Define Business Processes
All of your ATP companies—intranets, extranets, E-Business processes
When making a purchase decision does the delivery process become more important than the product or service?
Value to Customer Product/Service Delivery Process Product/Service Value Add Process What the Customer Buys Figure 10-1
Stock, Bond and Mutual Fund
Financial Product Options
Timely Execution of Trades and
Confidence in Financial
Charles Schwab & Co.
Computer Based Trades
Client Broker Service
Trade Risk Analysis
Value to Customer Product/Service Delivery Process Brokerage Service What the Customer Buys Value-add Process Figure 10-2 Value to Customer Analysis
Point-of-Sale (POS) System
Credit Card Approval
Wireless Portable POS
EDI Systems with Vendors
Infobot Voice Response
Value to Customer Product/Service Delivery Process Product/Service Value Add Process What the Customer Buys
Fast, Accurate Check-out
Fast Credit Approval
Access to Credit Information
Value to Customer Analysis: Mervyn’s Figure 10-3
An aircraft designed for
passenger comfort, operational
efficiency and safety.
Flexible design configuration
Value to Customer Analysis Boeing Commercial Airplane Group
CAD design system and
Customer input through network
Co-design process with customer
Quality control system
Vendor EDI system
Value to Customer Product/Service Delivery Process Commercial Aircraft What the Customer Buys Value-add Process Figure 10-4
Value to Customer Product/Service Delivery Process Product/Service Value-Add Process What the Customer Buys
Reengineering Hammer Definition: Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. Key words are fundamental, radical, dramatic and processes.
Michael Hammer Videotape The father of reengineering. At least the term.
Reengineering Business Processes Difference between business functions and business processes? Definition of a business process: A sequence of predefined activities executed to achieve a type or range of desired outcomes. Definition of process engineering: An approach to achieve radical improvements in value to customer and/or business efficiency.
New product development.
Customer order fulfillment.
Supply chain management.
New employee recruitment and hiring.
Improve value to customer.
Strengthen alignment of core processes to business strategies.
Pursuit of new opportunities.
Optimize cross-functional performance.
Broaden scope of activities and individual jobs to improve
responsiveness or flexibility.
Reduce operating costs.
Reengineering Guidelines 1. Senior management commitment to adopting a new process. 2. Team empowerment and decision-making. 3. Be careful about how you draw conclusions and create perception. 4. Move toward inquiry, not conclusions. 5. Make the space and time available for the official beginning with a team kickoff. 6. Reward system must be correctly focused.
Reengineering Methodology Institute Continuous Improvements Analyze Leverage Points Identify Process Breakthroughs Design Business Processes Implement Business Processes
Critical Success Factors
Activity Value Analysis
Benchmarks and Surveys
Process Prototyping and Implementation Performance Reporting Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6 Source: ISS Corporation
Reengineering Success Factors
Clear Objectives with a Well Defined Foundation.
Hewlett-Packard Reengineering Lessons Learned: 1. Goals and accountability must be clear. 2. Process ownership is crucial. 3. Links among business owners, process owners and IS organization are critical.
Avon Reengineering Approach Process Culture 1. Stay Focused 1. Analyze (Opposition) 2. Be Specific 2. Educate (Concerns) 3. Deliver Results 3. Motivate (Buy-in to process)
American Express Methodology
Resistance to Change? You often don’t have a choice. There are those that content that an organization has two choices: change or die.
Graying of Auto Industry Within the next year, as many as forty to fifty percent of the auto industry workforce will be eligible to retire. Auto companies must decide if they will replace these people with similarly skilled workers or redesign their jobs and recruit more technologically advanced workers. The shortage of skilled workers is partially a result of changes in work requirements as the industry moves from an auto parts or components mentality to a systems mentality. e.g. not an odometer but an entire dashboard.
Impact of Change Change is intensely personal. For change to occur in any organization, each individual must think, feel or do something differently. Even in large organizations, which depend on thousands of employees understanding company strategies well enough to translate them into appropriate action, leaders must win their followers one by one.
Let’s Not Forget
Xerox: Invented plain paper copiers but almost needed to
file bankruptcy after hemorrhaging financially while trying to
become the document company.
Eastman Kodak : Basically popularized film photography
but struggled to decide if it was in the imaging business.
Digital Equipment : Created the minicomputer
segment of the computer industry but has disappeared as a
IT Related Change If IT related change could be limited to only affecting the technology, implementation would be relatively simple. Adding human factors increases the complexity of the change process significantly. Successful implementation of change requires an understanding of the human as well as the technical aspects involved in the situation. IT projects and people translate to “here comes the next wave of change.”
Old Paradigms Die Hard! They have built in resistance to their own corresponding attitudes, institutions and cultures.
The Law of Change Achieving change, of any significance within an organization, is in inverse proportion to the success that it has had up to the time that management feels a change is needed. The greater the success of the company, the less likely it is to change.
Selecting a Change Strategy Which strategy to use in approaching a change problem is a decision affected by a number of possible factors. 1.Degree of Resistance. 2.Target Population Size. 3. High, Medium or Low Business Stakes. 4. The Time Window. 5. Expertise Availability. 6. Organization and People Dependency.
Is the purpose of the new technology clear to its users?
Do the users accept the need for the technology change?
Were the users involved in planning the new system?
Has there been good communication regarding the change?
Is there acceptance of the increased cost compared to the benefits of the new system?
Is there a perception of organizational support for the new system?
Is there compatibility of the new technology with the old way of doing things?
Have the social aspects of the new system been assessed?
Do the users feel that the new system reflects negatively on
their past performance?
Have the habit patterns of the users influenced the design of the new system?
Is there a lack of respect and trust in the change agents?
Has excessive pressure been involved relative to the project?
Is the pace of change perceived to be too fast or too slow?
15. Is there a significant amount of user fear of failure?
16. Can the status quo be reestablished if the new technology
Change Management Skills
Middle Management is Key
Organizational cultures are easy to establish when a company is young.
Middle managers must be enlisted as agents of change for an entire organization to change the way that it operates.
This will happen only if top management communicates directly and in depth as to the logic and importance of the proposed change.
Transition Versus Change 1. It goes on inside a person, not outside. 2. It takes much longer. 3. It starts with an ending. 4. It finishes with a new beginning. 5. In between is a neutral zone. This applies to organizations as well as individuals.
Burning Platform Decision A burning platform type of decision is at hand when the organization is facing a major, disruptive change in which the cost for the status quo is prohibitively high and there is a significant risk that implementation failure could occur.
Celebrate Your Victories
Companies often don’t celebrate enough when their people win.
They get so caught up in the daily grind of work that they don’t stop to enjoy what they have achieved.
Do things that build people’s self confidence. It’s all about praising others and getting excited about their victories.
Celebrating success will help to convince people that they are important, doing well and can respond to the next challenge even if it involves significant change.
Change Management Guidelines
Plan change management like you would change new products.
A new process needs to reflect the appropriate culture.
A focus on tools can be counter-productive.
Expect people unhappiness in a change process.
Gear the entire effort to the goals of a new program or process.
Structure where possible to have fun.
Conclusions Change has become the norm in most businesses Information systems are often the cause of or the vehicle for change. Change within an organization has to be managed appropriately.